Bought a spa day from Groupon or others? Did you get it?

The daily deals industry needs to get its house in order. Groupon, kgbdeals, LivingSocial, Crowdity and the rest all risk being seen as ‘get the money in the bank, not the customer through the door’ merchants, unless they collectively improve standards.

Over the last year it has been boom time for daily deals sites (once known as group buying sites, but the collective purchasing element’s fast disappearing). These sites negotiate with companies big and small to offer hyper-discounted vouchers for massages, spas, dental treatments, retailers, activities and more, in return for exposure to their huge databases.

It sounds great and indeed they do provide fantastic unbeatable bargains often at a quarter of the list price. We commonly include the best of the national (not local) deals in the weekly email. Yet we have access to information most consumers don’t. When deciding whether to include something we interrogate the company about the capacity available, to try and ensure that if someone pays they should be able to get it.

Yet I’m conscious that by mentioning these sites’ national deals, we provide a path into their daily local offerings and many of our users will then join these sites and start getting them. That’s one of my prime worries and reasons for this comment. Too many pay for deals they can’t get

No industry is free of complaints in forums or via social media. Yet what I find surprising with daily deals complaints, including from many friends, is the constancy of the problem. Using spas as an example, it tends to go a bit like this: "I saw their ad for "get an £80 massage for £20 at scrumyum spa", signed up to it and then got my voucher."

All good so far. Yet often you then hear this: "I kept trying to ring scrumyum. It’s a small spa a few miles away but they’re constantly engaged and not responding to emails." This is of course no surprise, as thousands may have descended on it trying to get their mega-discount. Even those who do get through may then be told: "There are no appointments available for months", leaving the impulse driven treat to be lost in the mists of time.

Of course not every deal fails like this, I’m sure the majority work smoothly, yet the volume of complaints feels like it is growing as the industry increases in size.

These sites are usually good at giving refunds (though it takes time, which means it’s cash in their bank not yours), but this requires you to ask – I suspect a decent proportion of people just let the vouchers go and forget – do let me know if this has happened to you.

In fact, I’ve heard of some retailers having to agree that if the individual doesn’t redeem a voucher, the daily deals site keeps all the cash and none gets passed on to the firm (eg, scrumyum spa). If true, it can mean consumers not fulfilling vouchers is the most profitable outcome for the daily deals site (I’m not suggesting it’s done deliberately, just that there isn’t a vested interest in working hard to stop this happening).

What we’d like to see happen

As a fan of daily deals sites and the opportunities they provide to consumers to get extreme discounts, I want to see the industry thrive. Yet, for that to happen in a fair way to consumers it needs to address this issue of managing capacity and to give the consumer a legitimate expectation that if they pay for a deal, they will be able to use it within a reasonable time.

Therefore, here are my thoughts on a code of conduct I’d like to see daily deals sites adopt:

Retailers have the capacity to fulfil all vouchers. You should always cap the number of vouchers sold for a deal to a number that can be fulfilled in a reasonable and timely manner. And to stop working with any retailers who regularly don’t deliver.

Customers get a full refund where the service has not been fulfilled. There should be no time limit on these refunds, provided customers have attempted to fulfil them in a reasonable time.

The cap should be published for each deal. This would allow people to take a decision as to how busy the service is likely to get.

If providers go bust the refund should be automatic. Daily deals sites work with many small companies and in our current economy that means some will go under. When this has happened we’ve heard of daily deals sites that haven’t contacted consumers and offered automatic refunds, they’ve waited until they’re claimed. That’s not appropriate.

It should be published how many people taking up the offer, the retailer can serve each day. This would allow it to be easily seen how tough it could be to get an appointment. For example if it is a massage on offer, how many therapists are there? And how many massage beds are available?

Retailers do not increase prices. If a voucher is sold that allows people to redeem a cash value (e.g. spend £15 and get £50 to spend in store), the company must guarantee it will not raise its prices during the voucher redeem period – otherwise this is misleading when consumers sign up.

Over the next month or so, the MoneySavingExpert.com team will be speaking to all the main daily deals sites to ask them for their view on this code of practice and if they choose not to adopt it, what they will do to ensure they are adequately managing capacity.

In the meantime I would suggest if you are using these sites, ask yourself whether the deal is one that could easily be fulfilled if many others go for it. If it’s £15 for a £50 voucher at a UK high street store – that’s great. If it’s selling a go-karting experience that only allows 5 people at a time, are you sure you’ll get a slot?

I would like to hear your experiences bad AND good about these sites, as well as any suggestions you have that we can pass to them for improvement via the links below.

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